How a pawnbroker gold loan is repaid
You leave gold, such as a ring or a chain, with a pawnbroker and receive a loan against it. Your pawn agreement says whether you pay anything during the loan. To get the gold back you repay the loan plus the interest, and any charges, in one payment.
A pawn taken under the Consumer Credit Act 1974 is redeemable at any time within six months after it was taken (section 116(1)). If the item is sold after that period, section 121 says any surplus from the sale is paid to the pawnor, and a shortfall becomes the amount still owed. Your pawn agreement sets out your actual terms.
The calculator takes either a monthly or a yearly rate, to match your quote. Interest is simple: the rate times the months, on the loan you took. It does not apply a minimum charge, so if your pawnbroker has one, work it into the rate or the fee. Some lenders instead take interest each month, or use equal instalments, and the calculator can show those too.
Worked example
Borrowing £500 for 6 months at 5% a month in one payment means you repay £650.00 to redeem the item, which is £150.00 in interest. As a yearly figure that is an effective annual rate of 69.00%, because the whole loan stays out for the whole term.
A lender quoting 6.5% a month on £1,000 for 6 months charges £390.00 in interest, so you repay £1,390.00 in one payment, an effective annual rate of 93.21%. The effective rate is a sensible way to compare it with a personal loan, because the monthly figure looks small.
If the same £500 loan took the interest each month instead, you would pay £25.00 a month, then £525.00 in the last month with the loan. Adding a 2% fee to the one-payment loan brings interest and fee together to £160.00, and the effective annual rate rises to 75.97%.
To check a one-payment pawn loan against what the item is worth, use the pawnbroker bullet loan calculator.
The pawnbroker loan vs personal loan calculator compares the cost with an unsecured loan.
Before you take a pawn loan
Ask for the redemption date, the total to repay if you redeem early, any minimum charge or fee, and what happens to the item if you do not redeem it. Compare the effective annual rate with other borrowing.
Inputs for the pawnbroker gold loan calculator
Repayment type
One payment at the end is the default for a pawn loan. Monthly interest and equal instalments are shown for comparison.
Loan amount
The amount the pawnbroker lends against your item.
Interest rate
The rate on your quote. The rate shown is only an example, so enter your own.
Rate is quoted
Choose per month or per year to match your quote.
Term
The months until you redeem the item, from 1 to 60.
Processing fee
A fee as a share of the loan, taken from what you receive. Enter 0 for none.
CALCULATOR QUESTIONS
Pawnbroker gold loan calculator questions
How long do I have to redeem a pawn in the UK?
Under the Consumer Credit Act 1974 a pawn is redeemable at any time within six months after it was taken. Your agreement may give longer.
What happens if I do not redeem my item?
After the redemption period the pawn becomes realisable (section 120) and the pawnbroker can sell it after giving you notice (section 121). Any surplus goes to you, and a shortfall is the amount you still owe (Consumer Credit Act 1974, section 121).
Is the effective annual rate the same as the APR on my agreement?
It uses only the interest and the fee you enter, so it can differ from the APR on your agreement, which your lender works out from the charges in the agreement.
Can I repay a pawn loan early?
Yes, because a pawn is redeemable at any time within six months (section 116). Check what interest is due for the part of a month you have used. The early repayment calculator shows the saving.